Archives for August 2012

An oft-asked question is whether child support payments can be garnished from Longshore and Harbor Workers’ Compensation Act (“LHWCA”) or Defense Base Act (“DBA”) workers’ compensation benefits. More likely than not, the answer is, “No.”

Section 16 of the LHWCA, which applies to the DBA, provides:

No assignment, release or commutation of compensation or benefits due or payable under this Act, except as provided by the Act, shall be valid, and such compensation and benefit shall be exempt from all claims of creditors from levy, execution, and attachment or other remedy for recovery or collection of a debt, which exemption may not be waived.

This provision, which is known as the anti-assignment or anti-alienation provision, prevents child support judgments from attaching to a disability award. It has been state courts and not federal courts which have commented on the child support issue. The Louisiana Supreme Court expressly stated that a wife could not garnish her ex-husband’s LHWCA benefits for past due child support. The court reasoned that to allow garnishment of LHWCA benefits would result in a jurisprudential exception to the LHWCA, which is not permitted pursuant to the “strong” language of the LHWCA. See Thibodeaux v. Thibodeaux, 454 So. 2d 813 (La. 1985).

The reasoning in Thibodeaux was accepted and applied by the Supreme Court of New York, Richmond County. In Spitalieri v. Spitalieri, 593 N.Y.S.2d 172, the court expressed sympathy for the plaintiff’s plight but nonetheless determined that LHWCA benefits could not be assigned. Any remedy to the child support issue must be addressed by Congress, and not state courts.

Although the majority of courts will not withhold child support payments from LHWCA benefits, at least one court will. The District Court of Appeal of Florida, Third District, determined that child support payments could be withheld. See Cigna Property & Casualty v. Ruiz, 834 So. 2d 234 (Fla. 3 Dist. Ct. App. 2002). In holding Section 16 inapplicable to child support arrearages, the court reasoned that child support payments are neither debts nor payments to creditors:

It is clear, under Florida law, that a claim for child support is not the claim of a creditor. See Department of Revenue v. Springer, 800 So. 2d 700, 701 (Fla. 5th DCA 2001) (holding that claims for child support arrearages not a claim of a creditor). See also Bryant v. Bryant, 621 So. 2d 574, 576 (Fla. 2d DCA 1993) (holding that exemption of workers’ compensation claims from claims of creditors does not extend to claim based on award of child support). Both Springer and Bryant involved claims for child support arrearages. In this case, where the claim is for “on-going child support,” it is clear that the deduction is not the claim of a creditor.

Moreover, it is equally clear that a child support obligation is not a debt. See Gibson v. Bennett, 561 So. 2d 565, 570 (Fla. 1990) (stating that: “a support obligation is viewed as a personal duty, not only to a former spouse or child, but to society generally.”) . . . .

After the Florida Supreme Court denied a request for certiorari, Cigna challenged the Florida Third District’s Ruiz case in a federal court…to no avail. The Rooker–Feldman doctrine (which generally prevents federal court review of a state court’s decision) required dismissal of the action.

It is the Florida Third District’s Ruiz decision which prevents a definitive answer regarding the child support issue. Without question, States have an inherent interest in protecting the children within their borders. But the more persuasive cases, Thibodeaux and Spitalieri, argue that Congress opposed assignment of LHWCA benefits. Consequently, a clear answer to the child support quagmire can only be given by Congress, which can either side with Thibeodeaux and Spitalieri or Ruiz.

How likely is Congress to amend the anti-assignment provision? If the most recent proposed amendments are a good barometer, then Congress is very likely to amend Section 16. Senate Bill 669 proposed amending Section 16 to state: “Benefits due or payable under this Act shall be subject to withholding and any other legal process int he same form and manner, and to the same extent, as withholding and other legal processes apply under Section 206 of the Employment Retirement Income Security Act of 1974 (29 U.S.C. 1056).” If Section 16 of the LHWCA is amended as Senate Bill 669 proposes, then child support payments could be garnished from LHWCA or DBA benefits. Until then, the reasoning in Thibodeaux is likely to persuade a court reviewing the issue, thus preventing assignment.

A surefire way to forfeit future benefits is to fail to follow Section 33(g). In our practice, we come across Section 33(g) cases now and again, and it is worthwhile reviewing Section 33(g) here. Section 33(g) of the Longshore and Harbor Workers’ Compensation Act, as amended in 1984, states:

(g)(1) If the person entitled to compensation (or the person’s representative) enters into a settlement with a third person…for an amount less than the compensation to which the person (or the person’s representative) would be entitled under this Act, the employer shall be liable for compensation as determined under subsection (f) only if written approval of the settlement is obtained from the employer and the employer’s carrier, before the settlement is executed, and by the person entitled to compensation (or the person’s representative). The approval shall be made on a form provided by the Secretary and shall be filed in the office of the deputy commissioner within thirty days after the settlement is entered into.

(2) If no written approval of the settlement is obtained and filed as required by paragraph (1), or if the employee fails to notify the employer of any settlement obtained from or judgment rendered against a third person, all rights to compensation and medical benefits under this Act shall be terminated, regardless of whether the employer or the employer’s insurer has made payments or acknowledged entitlement to benefits under this Act.

The Supreme Court of the United States previously stated that Congress, when enacting the statute quoted above, spoke with great clarity as to its intention. Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 484, 112 S.Ct. 2589, 120 L.Ed.2d 379 (1992) (“Often we have urged the Congress to speak with greater clarity, and in this statute it has done so.”). In the Cowart decision, Cowart entered into a settlement for his third party claim, but he did not secure a “formal, prior, written approval of the…settlement.” Id. at 472. The Court found that Cowart had forfeited his right to future indemnity and medical benefits, and further found that “the language of §33(g) is plain.” Cowart, 505 U.S. at 478. Among other things, §33(g) “protects the employer against his employee’s accepting too little for his cause of action against a third party.” Id. While this “forfeiture penalty creates a trap for the unwary,” only “Congress has the authority to change the statute, not the courts.” Id. at 483-84. Congress has not amended §33(g) in the twenty years since Cowart was decided.

The Cowart decision reached the Supreme Court upon grant of certiorari following the Fifth Circuit’s decision in Nicklos Drilling Co. v. Cowart, 927 F.2d 828 (5th Cir. 1991). In that decision, which the Supreme Court affirmed, the Fifth Circuit questioned “whether section 33 permits any exception to its requirement that all settlements with third persons that leave the employer liable for further compensation benefits have the prior written approval of the employer and the employer’s insurance carrier.” Id. at 830. The Fifth Circuit found that “the language of section 33 provides no exception to its approval requirement.” Id. at 832. Further, the Fifth Circuit found that “Congress intended to require prior written approval in the limited circumstances where a claimant settles for an amount smaller than his LHWCA compensation entitlement.” Id. In conclusion, the Fifth Circuit stated that “in light of the plain language of section 33… Congress has spoken unambiguously and so as to leave no room for embroidery.” Id.

The requirement for a prior, formal, written approval of a settlement has been oft-repeated. SeeKelly v. Red Fox Co. of New Iberia, Inc., 123 Fed.Appx. 595, 596-98 (5th Cir. 2005) (unpublished) (“Our court has consistently found that failure to obtain written approval of a settlement with a third party places an absolute bar on the receipt of further compensation from an employer or the employer’s carrier under the LHWCA.”); see alsoTrosclair v. Chevron U.S.A., Inc., 161 F. Supp. 2d 739, 746 (S.D. Tex. 2001) (“With respect to future benefits to be paid, the insurance carrier is entitled to a set-off, as opposed to a right of subrogation. As the waiver of subrogation has no effect on the right of set-off, a defendant still has an interest in the terms of plaintiff’s settlement in so far as future benefits are involved. Hence, for this reason, the Fifth Circuit has held on repeated occasions that even with a waiver of subrogation, a plaintiff’s right to future benefits is terminated if it settles its claim against a third-party without the consent of the insurance carrier.”) (emphasis in original).

So what does Section 33(g) boil down to? Dotting i’s and crossing t’s. If the strict procedural requirements are not followed, future benefits (indemnity and medical) are forfeited.

In a recent unpublished opinion, the United States Fifth Court of Appeals reviewed a district court’s grant of summary judgment dismissing a plaintiff’s negligence, unseaworthiness and maintenance and cure claims. Plaintiff, James Lett, worked for Omega Protein, Inc. (“Omega”) from 2007 to 2009 on several fishing vessels. Lett alleged that in September 2008 he spent several hours chipping rust off an engine room floor with a needle gun. This task allegedly forced him maintain an awkward bodily position that caused injury to his back and neck. These injuries were not reported to Omega. Lett sought medical treatment for his injuries in January 2009 and was prescribed medication for his pain.

In March 2009, Lett underwent a pre-employment physical for the upcoming fishing season. Lett did not advise the physician of his prior injuries or the medication he was taking. After being cleared, Lett hired on as a second engineer. Part of his duties required repetitive heavy lifting of hatch covers that Lett claimed caused an aggravation of his prior injuries.

Lett filed suit in September 2010 alleging that Omega was negligent, that the vessels he worked on were unseaworthy, and that he was owed maintenance and cure for his injuries. Omega moved for summary judgment on all of Lett’s claims. With respect to the 2008 injury, Omega presented evidence that using a needle gun was a routine, safe and simple task that required no training and Lett’s own testimony that the needle gun was working properly.

With respect to the 2009 injury, Omega presented evidence of its policy that employees should ask for assistance if something was too heavy to lift and one of Lett’s own expert’s determination that it took only 45 pounds of force to lift the covers. Omega also argued that Lett was not entitled to maintenance and cure for his 2009 injuries under McCorpen v. Central Gulf Steamship Corp., 396 F.2d 547 (5th Cir. 1968) because he intentionally concealed medical facts during his pre-employment physical, the facts were material to Omega’s hiring decision, and his non-disclosure and 2009 injuries were causally connected. The district court granted Omega’s motion for summary judgment and Lett appealed.

On appeal, Lett argued that he created genuine factual disputes with respect to all of his claims. First, he argued that Omega was negligent because it failed to perform a job hazard analysis on the use of needle gun as required by OSHA. However, the court noted that the OSHA guidance cited by Lett only required job hazard analyses for jobs with high injury rates or those having potential to cause severe or disabling injury. Here, Lett never presented any evidence to rebut Omega’s evidence that the use of a needle gun was a routine, safe and straightforward task.

Lett also argued that his liability expert, Captain Michael Stoller, opined that Omega breached its standard of care by failing to protect its employees from vibration-caused injuries. The court found the safety standards cited by Stoller inapplicable as Lett did not claim injury from the vibration of the needle gun but, rather, from the awkward position his body was in while he chipped rust from the floor. The court also held that Lett’s evidence of safer rust-removing equipment did not create a genuine factual dispute in light of Fifth Circuit precedent holding that simply pointing to safer methods or equipment without showing the equipment or method used by the employer is unsafe does not demonstrate an employer’s negligence.

With respect to his 2009 injury, Lett again relied on Stoller in arguing there was a genuine factual dispute for trial. Stoller opined that Omega was negligent in failing to perform a job hazard analysis on repetitive lifting requirements, failing to train employees to observe lifting limits and failing to replace heavy hatch covers. The Fifth Circuit was unconvinced, finding that one of Lett’s other experts contradicted Stoller’s conclusions as to the amount of Lett’s maximum lifts and that Lett only produced inadmissible hearsay evidence to support his allegations of having to personally lift 60-to-90 pound hatch covers off the deck. The court also affirmed summary judgment as to Lett’s unseaworthiness claims for both injuries based on the same evidence it relied on in sustaining summary judgment on his negligence claims.

Lett also challenged the district court’s grant of summary judgment on his maintenance and cure claims. Lett contended that a genuine factual dispute existed as to whether he intentionally concealed medical information because the examination form he filled out was not specifically designed to elicit information about his prior injuries. He also argued that Omega’s claim that it would not have hired him had he disclosed his injury was not dispositive of the issue. The court rejected Lett’s arguments and affirmed the district court’s ruling. The inquiry on the examination form was obviously designed to elicit information about his prior injuries and the fact that the question asked and was rationally related to Lett’s physical ability to perform the job requirements rendered the information material.

The Supreme Court of the United States called for new letter briefs in the Lozman case. The issue in Lozman is “[w]hether a floating structure that is indefinitely moored, receives power and other utilities from shore, and is not intended to be used in maritime transportation or commerce constitutes a ‘vessel’ under 1 U.S.C. Sec. 3, thus triggering federal maritime jurisdiction.” The reason Lozman might be moot is because the floating structure at issue in the claim has now been destroyed. As reported by Lyle Denniston on SCOTUSBlog.com, a Florida city purchased and then destroyed the houseboat. Accordingly, the Court wants the parties to answer whether there is a real controversy continuing in the claim. A copy of the Court’s Order can be found here. It poses the following question: “The res in this putative in rem admiralty proceeding was sold at a judicial auction in execution of the district court’s judgment on a maritime lien and a maritime trespass claim . . . and subsequently destroyed. Does either the judicial auction or the subsequent destruction of the res render this case moot?”